Scottish Budget 2026-27 Key Changes

The Scottish Budget for 2026-27 was announced on 13 January 2026. Here is an overview of key changes to be aware of for your service users and/or organisation.

Income tax thresholds 

• Basic and intermediate income tax thresholds will increase by 7.4% from April 2026. 
• If your earning are between £16,538 and £29,527 (the basic tax band) you will be able to earn more money before moving into a higher tax band, so you will keep a bit more of your pay. 
• The same applies if you earn £29,527 - £43,662 (intermediate tax band) 
• However, it's important to note that because most of the thresholds have been frozen, you may still end up paying more tax overall due to a process known as "fiscal drag" (when tax thresholds remain unchanged while wages rise due to inflation or economic growth)

Scottish Child Payment

• From 01 April 2026, the Scottish Child Payment, paid to families with a child less than one year old, will rise from £27.15 per week to £28.20 per week. Then, from 01 April 2027, the additional payment will be made to eligible families, bringing the weekly total to £40. 

Free breakfast clubs 

• All Scottish primary schools will offer free breakfast clubs by August 2027. Additional funding will be allocated to build on a pilot programme introduced last year that has so far "supported almost 500 breakfast clubs across Scotland

School activities for families most in need 

• More money will be put towards before- and after-school activities for families most in need. The Government said this follows "the success of the Scottish Football Association Extra Time programme" which holds activitiy clubs after school and during holiday periods for children in primary school

Activities for children

• Sports activities during the summer holidays will be free for all via a scheme called 'Summer of Sport' 
• The Government announced a universal 'learn to swim' offer, pledging to cover swim school tuition for all primary school children in Scotland

Energy price cap 

• Between 01 January and 31 March 2026, the energy price cap is set at £1,758 per year for a typical households that uses both electricity and gas and who pay by direct debit. This is an increase of 0.2% compared to the cap set 01 October-31 December 2025 (£1,755). 

As the temperature has dropped across Fife, households will also be using more energy to heat their homes. Anyone concerned about their energy costs can find a range of useful advice or arrange a home energy visit via the Cosy Kingdom – Stay warm, save energy website. 

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